Question #97 - Reading 10 Multinational Operations

Reading: Reading 10 Multinational Operations

PDF File: Reading 10 Multinational Operations.pdf

Page: 54

Status: Unattempted

Shared Context

- The currency translation adjustment that results from the translation of South Sea's data is closest to? A) Zero because there is no currency translation adjustment under the current rate method. B) −3,300 USD. C) 21,600 USD.

Question

If the temporal method is used, the retaining earnings is closest to:

Answer Choices:

A. 21,600 USD

B. 120,800 USD

C. 90,000 USD

Explanation

The retained earnings value is the plug figure. The value of total assets is $280,813. Subtracting the accounts payable, long-term debt, and common stock from the total assets leaves $120,813. LC Conversion USD Cash 25,000 /2.00 12,500 current rate Accounts Receivable 30,000 /2.00 15,000 current rate Inventory 35,000 /2.30 15,217 historical rate for inventory Net Fixed Assets 500,000 /2.10 238,095 historical rate for fixed assets Total Assets 590,000 280,813 Accounts Payable 20,000 /2.00 10,000 current rate Long Term Debt 100,000 /2.00 50,000 current rate Common Stock 250,000 /2.50 100,000 historical rate Retained Earnings 220,000 120,813 280,813 − 10,000 − 50,000 − 100,000 Total Liabilities & Equity 590,000 280,813

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